OfficeMax Takes Expertise to New Channels

Pete Townshend wasn’t thinking about business strategy when he wrote the famous lyrics for “Who Are You,” the rousing track in the 1978 album of the same name from rock legends The Who.

In a fun and ironic way, though, “Who Are You” is one of the all-time great strategic opening lines.

These three questions – What business are you in?  Who’s your competition?  What are your core competencies? – are certainly in the strategy definition workshop hall of fame.  Although there may be a tendency to sometimes pooh-pooh this type of corporate soul-searching, that doesn’t diminish the power that can be unleashed by illuminating answers and skillfully executed actions.

Consider school and office supply retailer OfficeMax.

You may be surprised to learn how OfficeMax has creatively modified its go-to-market strategy.  Office Max unlocked growth potential because it avoided defining itself as purely an office supply store retailer (i.e., Staples and Office Depot).

Basically, the company decided to leverage its school and office supply category expertise across retail channels, primarily in existing geographies, with a focus on being an “insightful customer advocate.”  OfficeMax describes its new channel strategy as a “transformational platform.”  It’s an intriguing example of thinking differently to compete by leveraging core capabilities and strengths in a unique way.

OfficeMax Presentation – 6/29/2010

A key customer insight underpins the new approach.  According to OfficeMax, approximately 90% of office supplies sold in the U.S. are sold outside the office supply channel; and it’s convenience that drives these purchases in other retail channels per information the company provided to Store Brands Decisions.

The company now bundles its product development, branding and retail merchandising expertise as a proprietary package and sells turn-key solutions to retailers in other channels.  This expanded service offering includes access to OfficeMax’s stable of private brands, extensive office supply category management expertise, and full-service management of the back-to-school marketing season.

New customers include food retailers Food Lion and Safeway; and the University of Arkansas book store.  “A partnership with a specialty retailer like OfficeMax provides a grocer with the category expertise and merchandise-promotional support necessary to make a statement,” explained William Zeuch, Office Max SVP New Business, in a Supermarket News interview.

OfficeMax touts that it is now able to “distribute products and services where customers prefer to buy them.”  CEO Sam Duncan told investors that this new capability has been achieved cost effectively because OfficeMax has been able to “open new doors and reach additional customers without investing in brick and mortar.”

OfficeMax also benefits from a double leveraging of its store brand innovation program in its own stores and at indirect competitive retailers.  Providing category management services to other retailers is innovative in its own right, yet Store Brands Decisions notes that “store brand product innovation is what is catching the attention of retailers looking to build more excitement in their office and school supply departments.”  The retailer has also become the supplier.

Headline For Marketers:  Don’t dismiss your old business school case study questions about how you define your business, competitive advantages and competition.  Be willing to dig beneath the surface.  No doubt significant work and skepticism abounded in Office Max’s deliberations.  Identify what you do great and figure out how to do it profitably in as many channels as possible.

Harvey Chimoff is a hands-on marketing leader and business-wide collaborator who builds marketing capabilities in B2B/B2C organizations that drive customer success.


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